India Plans Major Overhaul of IIP With New Base Year and Methodology

The Ministry of Statistics and Programme Implementation is preparing a revision of the Index of Industrial Production. The updated series is expected to be released from June 1, 2026, replacing the 2011-12 base year with 2022-23.

The changes aim to better reflect structural shifts in India’s industrial landscape over the past decade. This includes updates to methodology, sector coverage, and data frameworks.

Shift In Base Year and Rationale

The revised IIP will change its base year from 2011-12 to 2022-23 to align with current industrial conditions. A Technical Advisory Committee, set up in September 2024, recommended the revision after reviewing sector trends.

Over the past decade, the industrial sector has evolved due to automation, digitalisation, and shifts in global supply chains. The change aims to improve the relevance and accuracy of industrial output measurement.

Introduction Of Chain-Linked Framework

A key feature of the overhaul is the introduction of a chain-linked framework alongside the fixed-base index. This approach allows sector weights to be updated annually rather than remaining static for long periods.

It is expected to reduce distortions caused by outdated weight structures in the current system. The government also plans to use the geometric mean method to link the 2011-12 and 2022-23 series.

Expansion Of Sector Coverage

The revised index will expand its basket of item groups from 407 to 463. In manufacturing, 120 new item groups will be added, while 64 outdated groups will be removed.

Additional sectors such as gas supply, water supply, sewerage, and waste management will be included. The expansion aims to provide a broader and more representative picture of industrial activity.

Changes In Mining and Electricity Segments

The mining segment will now include minor minerals and rare earth minerals due to their growing industrial relevance. These materials play a key role in infrastructure, renewable energy, and advanced manufacturing sectors.

The electricity segment will be divided into renewable and non-renewable categories to reflect the ongoing energy transition. These changes are intended to improve sector-specific analysis within the index.

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Conclusion

The planned overhaul of the IIP represents a comprehensive effort to modernise India’s industrial statistics. The updated framework incorporates changes in technology, sector composition, and economic activity patterns.

Expanded coverage and revised methodologies aim to improve the accuracy of industrial output measurement. The revision is part of a broader initiative to strengthen India’s economic data systems, including the planned introduction of an Index of Services Production.

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